According to Realtor.com’s five year study spanning 2011-2016, the appreciation rate of various home features was calculated and analyzed. The top two features of a home that are critical to your sales success for the millennial buyer is kitchen and yard. The kitchen must be updated or modern and the yard must be large enough to hold gatherings and family play time as the millennial generation begins to focus more on family than fun at all costs.
In general, a home’s value appreciates three to four percent per year. This is typically attributed to population growth in conjunction with inflation. However in 2016, home values appreciated at an average of 6.3% for the year.
The highest appreciating feature of a home is the open floor plan. This feature alone created a 7.4% annual increase in home values year over year. Interestingly enough, smaller homes with square footage of less than 1200 square feet are more desirable than larger homes. Smaller homes appreciated 7.5% per year while larger homes with square footage above 2400 square feet appreciated at 3.8% per year. The smaller spaces are in shorter supply that drives prices upward faster by competing millennials wanting starter homes and baby boomers wanting to downsize.
Two bedroom homes appreciate faster at 6.6% per year over other floor plans with homes having five bedrooms appreciate at 4.3% per year. Modern and contemporary homes having an architectural style of simple geometric shapes and large windows have appreciated 7.7% per year while bungalows appreciated 6.5% per year and traditional homes have appreciated 5.6% per year. The lowest appreciating architectural styles were Craftsman bungalows at 3.7% per year and Victorians at 2.2% per year. Clearly these averages seem lower than cities where these architectural styles are predominant and sought after for their specific style. For example, the Craftsman bungalows in St. Petersburg and the Victorians in San Francisco are highly desirable architectural styles in these cities. Realtor.com’s analysis of this data seemed to be related to the maintenance responsibilities when staying true to the home’s historical architecture.
Finally when it comes to views there were some surprises in the data. Homes with a park view or a green space view appreciated the most at 7.9% per year. Mountain views appreciated at 5.1% per year and lake views appreciated at 4.9% per year. Surprisingly ocean views appreciated the least at 3.6% per year. Analysis of the study showed that the lower ocean view appreciation is multifactorial in that the most expensive homes tend to be along the ocean and recent storms have spooked buyers of oceanfront properties.
Some other features that are associated with annual home value appreciation include patios (6.8%), hardwood floors (5.7%), fireplace (5.3%), finished basement (4.6%), hot tub (3.9%), stainless steel appliances (3%) and granite countertops (2.5%).
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